The $867 Dispute Becomes An $883,654 Judgment In Ravet

The jury also found that Workout was injured by the defendants in the amount of $383,654, plus interest. Finally, the jury awarded punitive damages against Gary and his Children's Trust for $500,000 -- and against Gary's now-former girlfriend Dorota Pearson in the amount of $250,000 (thanks for helping out!).

So, as a quick recap, Gary Ravet was able to turn the $867 dispute with Workout over the membership fees into an $883,654 judgment against himself, a $383,654 judgment against his mother Shirley and his father Emanuel's estate, and a $633,654 judgment against his ex-girlfriend Pearson.

Well done, Gary, well done.

This is probably as good a place as any to mention what the Opinion doesn't, which is that Ravet was a failure as a lawyer too, the State Bar of California's website listing Gary Keith Ravet as having tendered his "Resignation with charges pending" on May 28, 2003 -- the same year that he lost the $867 dispute with Workout. The State Bar's website also reveals that he had a history of misconduct, receiving probation but no actual suspension on November 15, 1997.

But returning to our case, the trial court was sympathetic to at least Gary's former flame, Dorota Pearson, and threatened to grant her a new trial unless Workout voluntarily pared down the damages against her to only $230,000.

After that, the case went up on appeal, which we will now discuss.

After giving an excellent history of the law of fraudulent transfers in California and the Uniform Fraudulent Transfers Act, the Court of Appeals panel turned to the one issue where the trial court did err -- how the Children's Trust was named in the judgment.

The trial court had entered judgment against the Children's Trust. The Court of Appeals noted that a Trust is not a thing that can be sued, like a person or a corporation, but instead is simply a fiduciary relationship whereby one holds property for the benefit of another. Because a Trust doesn't really exist, but is just a relationship, the one who should be sued is whoever is acting as the Trustee in his capacity as the Trustee; here, Gary for his Children's Trust.

But that was easily enough fixed by the Court of Appeals simply substituting Gary as the Trustee for the Children's Trust in the judgment.

Gary claimed that this was a critical error that "poisoned the entire case". Not only was that a ridiculous claim since the mis-naming of the Children's Trust was only a clerical matter, but the Court of Appeals noted that Gary had not timely objected to the mis-naming and had thus waived his argument, such as it was.

Next, Gary argued that the jury instructions were deficient because they allowed the jury to essentially find a transfer from himself to himself. The Court of Appeals rejected this argument, pointing out that Gary transferred assets from himself as an individual to himself in his capacity a Trustee of his Children's Trust. Although the Court of Appeals did not say so, this argument was specious.

More interesting was the Court of Appeal's treatment of the punitive damages awards. Since the trial court did not award any compensatory damages against Gary as the transferror -- as those would have been duplicative of the judgment that he already owed to Workout in the malicious prosecution case -- Gary then argued that there was no basis for punitive damages to be awarded against him individually, since punitive damages typically ride on top of compensatory damages.

However, the Court of Appeals pointed to case law in California to the effect that punitive damages only required a showing of injury to the plaintiff, not an actual award of compensatory damages. Because the jury found that Gary should be jointly liable with the other defendants for the damages to Workout, this was enough to sustain the punitive damages finding against Gary. Thus:

Under these circumstances, we find no compelling reason that Ravet should be immune from punitive damages merely because the court fashioned the judgment to avoid confusion and prevent a double recovery. Both objectives were for Ravet's benefit. Further, on the record before us, it is clear that Ravet was the mastermind behind the numerous fraudulent transfers and is deserving of punitive damages for his fraudulent acts.

And with that, the $867 dispute turned into an $883,654 judgment was affirmed.

ANALYSIS

Sometimes you see people become obsessed with trivial disputes such that they spiral out of control and the person crashes.

If these folks just harmed themselves, we could chalk it up to Financial Darwinism and spend little more time on it. However, we see once again the phenomena of a debtor dragging his family and friends into his dispute, with disastrous consequences.

Here, Gary dragged all of his Children's Trust, his parents, and one of his girlfriends into the dispute, and left them or their estates holding a massive bill.